West China Securities: Apple accelerates entry into the foldable screen market, core segments are expected to benefit significantly

According to the Zhitong Finance APP, Huaxi Securities released a research report stating that, according to TrendForce data, the global shipment of foldable smartphones is expected to reach 17.8 million units in 2024, and is projected to grow to 70 million units by 2027, with a CAGR of 57.8% from 2024 to 2027. According to IT Home, Apple (AAPL.US) is expected to launch a foldable iPhone in 2026, which is likely to accelerate the growth of foldable smartphones. In terms of incremental components, to further reduce creases and achieve lightweight foldable screens, hinges are expected to incorporate innovative materials and processes such as liquid metal and titanium alloy 3D printing; on the other hand, flexible cover glass is a key component of foldable screens, requiring transparency, foldability, and good recoverability. Uneven thickness ultra-thin glass (UFG), as a special type of UTG glass, is expected to become the next generation mainstream solution.

The main points of Huaxi Securities are as follows:

Apple's entry into foldable screen products accelerates industry development

Traditional smartphones have entered a mature market phase, and foldable screens define a new form of smartphones. According to TrendForce data, the global shipment of foldable smartphones is expected to reach 17.8 million units in 2024, and is projected to grow to 70 million units by 2027, with a CAGR of 57.8% from 2024 to 2027. According to IT Home, Apple is expected to launch a foldable iPhone in 2026, which is likely to accelerate the growth of foldable smartphones.

Incremental Component 1: Hinges

Hinges are the core component of foldable smartphones, responsible for supporting and guiding the opening and closing of the screen. Although the size of the hinge is small, its structure is complex, containing hundreds of parts, and must meet a lifespan of over 200,000 openings and closings, requiring extremely high strength, precision, and wear resistance for the components. Meanwhile, under the trend of lightweight design for foldable screens, hinge design must ensure smooth opening and closing while also being lightweight and durable, effectively improving issues such as creases. Therefore, major manufacturers are actively iterating products and comprehensively upgrading the structure, materials, and processes of hinges.

In terms of form, foldable screen hinges are mainly divided into two types: droplet and U-shaped. Among them, droplet hinges have relatively shallower creases and can effectively reduce screen wear. Huawei, OPPO, Xiaomi, vivo, and other foldable screens basically adopt droplet hinges.

In terms of manufacturing processes, foldable screen hinges mainly use MIM technology. Meanwhile, to further reduce creases and achieve lightweight foldable screens, hinges are expected to incorporate innovative materials and processes such as liquid metal and titanium alloy 3D printing.

Incremental Component 2: Cover Glass

Flexible cover glass is a key component of foldable screens, requiring transparency, foldability, and good recoverability.

In terms of materials, the two commonly used materials for foldable screen flexible cover glass are transparent polyimide (CPI) and ultra-thin flexible glass (UTG). Compared to CPI materials, UTG materials have advantages such as better light transmission, higher hardness, scratch resistance, good tactile feel, and good elasticity, thus UTG is gradually replacing CPI materials to become the current mainstream material for foldable screen flexible cover glass. According to CINNO Research data, the usage proportion of UTG in domestic foldable smartphones increased to 70% in 2023 and continues to show an upward trend. In addition, uneven thickness ultra-thin glass (UFG), as a special type of UTG glass, is expected to become the next generation mainstream solution In terms of manufacturing processes, the production of UTG is divided into primary forming methods and secondary forming methods. Among them, the primary forming method has a higher technical barrier and is mainly mastered by several large foreign display glass manufacturers. The manufacturing processes mainly include overflow pulling, narrow gap pulling, and float glass. The secondary forming method (thinning method) has a lower technical threshold for batch production, and the production costs are controllable, making it the main solution currently adopted by domestic manufacturers. However, compared to the primary forming process, products made using the secondary forming method have issues such as poor appearance yield and insufficient product consistency during mass production.

Investment Recommendations

Apple's accelerated entry into the foldable screen market is expected to drive the rapid growth of foldable smartphones and lead to innovation and upgrades in the foldable screen industry chain. We are optimistic about the core incremental links such as foldable screen UTG cover plates, hinges, and new technologies like liquid metal and 3D printing. Related beneficiary targets: 1) UTG: Lens Technology (300433.SZ); 2) Hinges: Lingyi iTech (002600.SZ), Tonglian Precision (688210.SH), Jingyan Technology (300709.SZ); 3) Liquid Metal: Yian Technology (300328.SZ); 4) 3D Printing: Huashu High-Tech (688433.SH), Bolite (688333.SH).

Risk Warning

Downstream demand may fall short of expectations, the pace of new product launches may not meet expectations, and the implementation of new technologies may not meet expectations, etc